Poly(lactic acid) (PLA) is a biodegradable polyester polymer that is a promising material for replacing petroleum-based polymers in various applications. The present study investigates the mechanical and thermal properties of hydrolyzed collagen (HC) powder-reinforced biopolymer composite blown films. The biodegradable polymer PLA was reinforced with HC at different weight percentages (0.5%, 0.75%, 1%, and 1.25%) using the solution blending method in chloroform, followed by blown-film extrusion. Among different weight percentages of HC in the PLA matrix, 1 wt % HC reinforced with PLA blown films exhibited significant changes and improvements in the FTIR, XRD, TGA, and DSC analyses. A polymer blend formation from PLA and 1% HC was observed in XRD, FTIR, and Raman analyses, exhibiting chemical bonding of the amide group to the PLA backbone. It was understood that intermolecular interaction of the PLA and HC molecules was due to the inter-H bonds of the −NH, −OH, and −CH functional groups. The thermal behavior and crystallinity of the PLA/HC composite films were investigated using TGA and DSC. Compared with other film samples, PLA/1% HC exhibited a higher thermal stability of 360.29 °C. The tensile studies show significant enhancement in the flexibility with a high elongation strength of PLA/HC composite films compared to neat PLA films. The fracture analysis of PLA/1% HC confirms the interfacial compatibility and transformation to plastic deformation due to the chemical bonding of HC in the PLA matrix. The PLA/HC composite films exhibit UV barrier properties that are recommended for food packing applications.